The Securities and Exchange Commission today filed a complaint charging Fred Moldofsky, a self-described day trader residing in Houston, Texas, with securities fraud for posting a fake press release related to Lucent Technologies, Inc. ("Lucent") on a Yahoo! Finance message board. The complaint alleges that Moldofski posted the fake release, which purported to announce a quarterly earnings shortfall, more than 20 times on March 22 and March 23, 2000. The complaint alleges that Moldofsky violated Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

In a related action, Moldofsky was arrested on charges of securities fraud contained in a criminal complaint filed by the United States Attorney for the Southern District of New York and the United States Postal Inspection Service. United States v. Moldofsky, 00 MAG 0622. That complaint is based on the same conduct.

The Commission's complaint alleges the following:

During the afternoon of March 22, Moldofsky posted several messages using the alias "kahuna_and_the_brain" reporting rumors that Lucent would not meet quarterly earnings projections.

In the evening of March 22, Moldofsky posted a message using the alias "hot_1ike_wasabe" with the headline "LUCENT RELEASES EARNINGS WARNING!DAMN!" The text of that message purported to be a copy of a Lucent press release announcing that it would not meet analysts' earnings estimates for the quarter ending March 31, 2000. In fact, Lucent had issued no such release.

Beginning at 7:56 that evening and continuing through the end of the morning on March 23, Moldofsky reposted that press release 20 times using the alias "F1oydian_us." Moldofsky had created that alias that day. It was designed to resemble a screen name used by a frequent commentator on the Lucent message board, who historically had expressed a positive view of Lucent stock. The reposted messages bore a variety of lurid headlines emphasizing the disastrousness of the news and/or the genuineness of the release.

While he was posting and reposting the fraudulent press release, Moldofsky posted additional messages using other screen names that commented on the release or on the poster's conduct.

Lucent stock closed on March 22 at $62.625, down $2.625 from the opening price that day. On March 23, Lucent opened at $62.125 and traded as low a $60.375 before the fraudulent press release was disavowed.

The complaint alleges that Moldofsky violated Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. It seeks an order permanently restraining and enjoining him from future violations of those provisions, as well as civil penalties.